A native’s guide to San Francisco Bay Area real estate professionals & cities

US Trustee McHale

Post navigation

The following is an amazing comment sent to deansguide from a person claiming to be one of the Ed Okun jurors in the Ed Okun criminal trial. The often sad and terrible case of Edward Okun has just ended in a courtroom in Richmond, Virginia. The verdict: GUILTY!

Editor’s Note: I became aware of Ed Okun through a title insurance source who tipped me to the fact that a very nasty scandal was about to hit a number of investors in Silicon Valley in April of 2007. That tip led to my participation as one of the leading information sources for the Ed Okun ponzi case. In that time the following ocurred:

I met 16 of the original 350 Trainwreck members with Elizabeth Callanan leading the charge of information and a true force behind much of my writing

I consulted with Mike Maiello Forbes Magazine editor on the case

My mystery caller, from Miami, claimed to have inside Okun information (which he did) kept in contact with me throughout the proceedings

I was threatened by a powerful New York law firm where one of the principles had a very shady past

I was threatened over the phone by an unknown caller who claimed to be “connected”

I was approved as one of the only blogs, by the US Attorney’s office in Virginia, to move information forward regarding dates and times. This was the work of my good friend Elizabeth

I highlighted 3 Okun victims who lost their life savings and attempted to provide new information

I wrote upwards of 70 articles on the Okun case and surrounding path of wreckage in the number of lives effected, savings stolen, and retirements ruined

Okun Guilty

Although the laundry list of charges include, according to theAssociated Press story, 23 counts of fraud, money laundering, bulk cash laundering, and making false statements, the following comment really says it best:

I served as a juror on the Edward Okun case in the U.S. Eastern District Court of VA. While we (the jury)found him guilty of all charges today 3/19/09, it was hard watching Okun as the verdicts were read. I am now able to see all of the stories that are out there about him and all the damage he has done to so many people. It helps verify that the jury made the right decision based on the evidence we were presented in court. I know that many lives were ruined, but am glad to know that I played a role in stopping him from harming anymore people.

Imagine you placed your life savings into a 1031 exchange with the idea of upgrading or investing in property that would support your retirement. Imagine that there are no laws or a legal arm of the government to oversee and regulate this investment vehicle but you were unaware of this fact because it seems so ludicrous to think that such an important investment tool would NOT have laws regulating it’s exchangers. Then imagine that a man named Ed Okun comes along and buys your 1031 exchange group for pennies on the dollar with the intention, and right, to liquidate your cash as a “candy store” slush fund that would support a life style any middle eastern oil sheik could appreciate.

Finally imagine that Okun abuses and uses the Bankruptcy Court laws in this country to buy time in order to extract every last dime of equity out of property purchased with your money. US Trustee’s newsletters give some insight to the madness.

20 Questions, 20 Different Answers

1. How can our legal system lack safeguards, laws to prevent 1031 swindles?
2. How can a industry 1031 exchange association FEA remain inconsequential and irrelevant to consumers and objectively regulate it’s own “paying” members?
3. How can insurance companies trumpet their coverage of 1031 deals when in reality coverages are woefully underwritten, alarmingly difficult to navigate, and for all practical purposes no deterrant at all?
4. Why are so many Qualified Intermediaries, under qualified and without government regulated background checks, allowed to run free in our financial world?
5. Why is our national media ignoring this story? Is it not sexy enough?
6. Why are there more background checks when applying to adopt a pit bull or pit bull mixed puppy at your local SPCA than there are in starting a 1031 exchange?
7. Why did Senator Mike Machado the chair for the Committee on Revenue and Taxation in California (responsible for 1031 issues) not know what a 1031 exchange transaction entails, did not know the lack of laws regulating 1031 exchanges, why did he not know of the rip offs that were going on in California and around the country?
8. Why is it that when laws and regulations are discussed in the 1031 exchange industry I receive any objections from QIs? And why is it that these objections always center around the “freedom” of doing business, keeping government out of big business, or keeping “Big Brother” out of our business?
9. Why is the US government ready to bail out irresponsible home owners and criminal mortgage, banking, and appraisal industries?
10. Why do the victims of the Ed Okun’s crimes have to pay for the administration costs of lawyers, investment firms, tax professionals, real estate services, and maintenance costs associated with attempting to recover their own monies?
11. Why isn’t the US government offering a “bail out” package to Ed Okun victims to defray the $16 million dollars worth of recovery costs accrued so far?
12. Why are Realtors, pawnshop owners, property management firms, law firms, investment firms, service providers, luxury product providers, and any other entity that “knew” Okun was paying with stolen monies not being held accountable in some way for their part in Okun’s expenditures?
13. Where does a broke 65 year old go to work to survive the loss of his-her entire net worth and the possibility of IRS troubles?
14. How many other Qualifed Intermediaries have stolen or disappeared with monies, never to be caught, that have not been publicized because the size of the embezzlement was not sexy enough for media sources to cover the story?
15. Why is Obama or Clinton not mentioning this industry as a place of change-a rallying cry for their campaigns of change?
16. When will national laws be instituted, similar to drug laws, that outline criminal penalties on a federal platform as a deterrent to would be criminals?
17. When will a National 1031 Exchange Commission or Commissioners office be created as the czar with the power to ride shotgun over the industry?
18. Will local, state, and federal governments coordinate efforts together to identify and eliminate suspect 1031 Exchangers currently doing business?
19. Are prosecutors in the Okun case going to make this an “example” case as a warning to potential 1031 exchange criminals?
20. Were there individuals or groups operating within the Okun “organization” that have hidden assets making them equally liable for the loss of the 1031 Tax Group monies?

“A bankruptcy judge has denied a bid by 1031 Tax Group owner Edward Okun to back out of his deal to sell his collection of luxury items to repay some of the $150 million owed to creditors of his failed real estate tax shelter” according to Associated Press reporter Patrick Fitzgerald in his article “1031 Tax Group Owner Ed Okun Loses Court Bid to Keep Toys.”

What will the rest of this ongoing saga bring us? Only time will tell but as it stands now it has been a long and sad trail to recovering settlement monies that will never fully be restored to their rightful owners.